Peru Faces Reclassification To Frontier Market Status

Peru’s current classification as an emerging market now hangs in the balance after MSCI announced it may downgrade the South American economy to a frontier market.

Emerging markets in general have not being performing well this year, with the MSCI Emerging Markets index down 11% since the start of the year. MSCI Peru’s performance is much worse than the benchmark and has shed 22% of it’s value year-to-date, compared with it’s continental counterpart Argentina. Only three securities in the MSCI Peru All Cap Index are currently achieving the relevant investment requirements that all Emerging Markets have to abide by.

MSCI Peru year-to-date performance vs MSCI Emerging & Frontier Indices. Peru has performed worse than the two benchmarks so far this year

MSCI have drafted a consultation document in regards to the potential reclassification of Peru from emerging market status to frontier market status. This adds to Peru’s already existing problems, with the economy…